Yesterday, ten Democrats and Republican senators announced that they reached an infrastructure bill. This compromise, the Senators say, will allow the United States to rebuild roads, bridges, and more, while putting people back to work. Best of all, it won’t require any tax hikes! Wait. What? Oh. Well. I guess they can do what they’ve been doing for the last year to pay for it. Print it out of thin air.
You’ll have to forgive my confidence in Congress’ fiscal management in the wake of COVID. A new report suggests that as much as half of all unemployment stimulus ended up in the hands of criminals.
This is what happens when there is no accountability. Reports indicate that crime syndicates around the globe were able to siphon off billions and billions of dollars. Anyone paying attention could have predicted this.
People ask – what is to be done about all this crime and theft of public dollars? The answer: Nothing.
I live in Florida, where Medicare fraud is one of the largest “industries” in the state. Former Columbia/HCA CEO Rick Scott oversaw a company that pled guilty to 14 felonies tied to such fraud during his tenure. The board of directors forced him to quit. He’s now one of the state’s two sitting Senators.
The Inflation Trade
There’s still a lot of focus around inflation, but the markets largely shrugged off yesterday’s CPI figures. Instead, with concerns about the health of the U.S. dollar in focus, investors appear to be following Dr. Bauer’s advice. If you’ve been following his thrice-weekly advice at Godesburg’s Haven Investment Letter, you’d know how he feels about inflation and the Greenback. He has noted that stocks offer strong protection against inflation.
I have a similar sentiment. When gold remains subdued compared to other commodity categories and investors are speculating wildly on cryptocurrencies, more and more dollars continue to spill into mega-cap tech firms.
Amazon, Apple, Facebook, Netflix, and Alphabet are all moving higher. To me, they’re a very safe store of value. These firms have grown so large that their market caps are now bigger than entire European economies. So, why not hold shares in these firms instead of fiat currencies and illiquid metals?
Oil Rebound on Tap
Finally, you know that I’ve been bullish on oil for the last few weeks. While I’m not as bullish as Goldman Sachs – which predicts Brent crude will hit $80 this year – I’m close. My target for WTI is about $73, while Brent, I think, is poised for $75.
I expect that Iran will be able to bring some of its crudes back online this summer. And if they don’t know due to ongoing geopolitical tensions, then another OPEC member will gladly make up the difference.
The International Energy Agency made two significant announcements in the last 24 hours. First, it said that oil demand would return to pre-pandemic levels by the end of 2022. But it also said that nations need to invest now in renewable energies. The IEA wants the globe to be carbon neutral by 2050. This will require substantial amounts of investment in alternative energy systems.
I do not believe the hype around electric vehicles due to the massive amount of lithium and other metals required to make this possible. I also think that we dramatically underestimate the costs and logistics of charging stations around the nation. I’m very bullish on hydrogen instead as a fuel. And even then, it has limitations.